By Chris Vermeulen of TheGoldAndOilGuy.com
NEW YORK (
) -- This past week the stock and commodities markets slowly recovered from their recent selloffs. So far, the stock and commodities markets are moving as we had expected.
If recent historical prices repeat, then we are looking for a small move higher on Monday and then a couple of days of weakness later in the week for both the stock market and the commodities markets.
With any luck, there will be a surge of low-risk setups in the near future. In this article, we'll look at charts of gold, as represented by
SPDR Gold Shares
; natural gas, as represented by the
United States Natural Gas
fund; crude oil, as represented by the
United States Oil
fund; and the stock market, as represented by the
SPDR S&P 500
Gold is trading at a key pivot point (shown in the chart below). In the coming week gold most likely will make a sizable move either up or down.
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Past chart analysis points to lower prices for gold, which would complete an ABC trace pattern. This would make for a larger and stronger rally once prices begin to turn back up. Silver is trading in a similar fashion. Gold and silver tend to move together, with silver having more volatility than gold.
United States Natural Gas (UNG)
Natural Gas continues to try to bottom and posted some solid gains on Thursday and Friday with rising volume. But we have seen this pattern form over and over again in the past year, so I am not excited yet. Once the base is formed and the trend starts up we will find low-risk entry points for this commodity. I would look for shorting opportunities but natural gas is so oversold that I feel the risk is higher than I prefer.
United States Oil (USO)
It looks like the trend-line breakdown flushed out a lot of weak positions as seen in the volume surge. Oil momentum is still down, but we are now starting to look for a buy signal.
SPDR S&P 500 (SPY)
Stocks recovered nicely from the previous week's sharp selloff. We saw volume rise with higher prices. This is a strong sign of the overall strength of the market. But it is important to note that market sentiment has reached an extreme level, with 53% of traders now being bullish on the market and only 17% being bearish. This extreme level is the same level reached just before the January correction earlier this year.
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Chris Vermeulen is founder of the popular trading sites www.thegoldandoilguy.com and www.ActiveTradingPartners.com. There he shares his highly successful, low-risk trading method. Since 2001, Chris has been a leader in teaching others to skillfully trade in gold, silver, oil and stocks in both bull and bear markets.